Disney to lay off 7,000 workers in major cost-cutting restructure
The Walt Disney Company on Wednesday announced a sweeping restructuring under recently reinstated boss Bob Iger, cutting 7,000 jobs as part of an effort to save $5.5 billion US ($7.39 billion Cdn) in costs and make its streaming business profitable.
The layoffs represent an estimated 3.6 per cent of Disney’s global workforce.
Shares of Disney rose eight per cent to $120.77 in after-hours trading.
Iger said he would reorganize the company into three segments: an entertainment unit that encompasses film, television and streaming; a sports-focused ESPN unit; and Disney parks, experiences and products.
“This reorganization will result in a more cost-effective, co-ordinated approach to our operations,” Iger told analysts on a conference call. “We are committed to running efficiently, especially in a challenging environment.”
Iger also said he would ask the company’s board to restore the dividend for shareholders by the end of 2023.
The CEO, who came out of retirement in November to run Disney for two more years, is under pressure to improve financial returns. Activist investor Nelson Peltz is fighting to join Disney’s board, arguing the company has overspent on streaming and fumbled succession planning.
Disney is the latest media company to announce job cuts in response to slowing subscriber growth and increased competition for streaming viewers. Warner Bros. Discovery and Netflix previously underwent layoffs.
Disney earlier reported its first quarterly decrease in subscriptions for its Disney+ streaming media unit which lost more than $1 billion.
Third, restructure in five years
This marks Disney’s third restructuring in five years. It reorganized its business in 2018 to accelerate the growth of its streaming business, and again in 2020, to further spur streaming’s growth.
In November 2020, Disney announced that it would lay off 32,000 workers, primarily at its theme parks. The cuts took place in the first half of fiscal 2021.
On Wednesday, Disney said it planned to cut $2.5 billion in sales and general administrative expenses and other operating costs, an effort that is already under way. Another $3 billion in savings would come from reductions in non-sports content, including the layoffs.
For the quarter that ended on Dec. 31, Disney reported adjusted earnings per share of 99 cents, ahead of the average analyst estimate of 78 cents, according to Refinitiv data. Net income came in at $1.279 billion, below analyst estimates of $1.429 billion. Revenue hit $23.512 billion, ahead of Wall Street estimates of $23.4 billion.
The reorganization marks a new chapter in the leadership of Iger, whose first tenure as CEO began in 2005. He went on to fortify Disney with a roster of powerful entertainment brands, acquiring Pixar Animation Studios, Marvel Entertainment and Lucasfilm.
A decade later, Iger repositioned the company to capitalize on the streaming revolution, acquiring 21st Century Fox’s film and television assets in 2019 and launching the Disney+ streaming service that fall.
Iger stepped down as CEO in 2020 but returned to the role in November 2022.
Now, Iger will seek to put Disney’s streaming business on a path to growth and profitability. The new structure also makes good on Iger’s promise to restore decision-making to the company’s creative leaders, who will determine what movies and series to make and how the content will be distributed and marketed.
What every Canadian investor needs to know today – The Globe and Mail
Canada’s main stock index opened higher Wednesday with energy stocks gaining and Dollarama shares advancing on the retailer’s latest earnings. Wall Street’s key indexes also started positive as jitters about the health of the banking sector continued to abate.
At 9:34 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 143.74 points, or 0.73 per cent, at 19,801.27.
In the U.S., the Dow Jones Industrial Average rose 172.29 points, or 0.53 per cent, at the open to 32,566.54.
The S&P 500 opened higher by 28.26 points, or 0.71 per cent, at 3,999.53, while the Nasdaq Composite gained 139.51 points, or 1.19 per cent, to 11,855.59 at the opening bell.
“Regardless if it is far too early to have a confident view of the implications of the current banking turmoil for the U.S. economy, nothing matters regarding stocks,” Stephen Innes, managing partner with SPI Asset Management, said in a note.
“After shifting from recession worries in January to sticky inflation fears in February and another sharp pivot contending with banking stress and credit crunch fears in March, the beat goes on as far as stocks are concerned.”
On Wednesday, Michael Barr, the Federal Reserve’s vice chair of supervision, appears again in Washington at a hearing looking at the regulatory response to recent failures in the U.S. regional banking sector. During an appearance before the Senate Banking Committee on Tuesday, Mr. Barr said he was first made aware of the interest rate risk-related issues at Silicon Valley Bank in mid-February, just weeks before its failure, Reuters reported.
In this country, the federal government’s latest budget remains in the headlines.
The Globe reports that slower economic growth and higher public spending are straining Ottawa’s bottom line, as the Liberal government’s 2023 budget announced billions in new spending on clean technology and an expanded national dental care program. The fiscal year that begins April 1 is projected to show a $40.1-billion deficit, compared with a $30.6-billion forecast in the fall update. The government expects the deficit to shrink to $14-billion by 2027-28. It had previously forecast a small surplus for that year.
On the corporate side, Nasdaq-listed shares of Vancouver-based Lululemon jumped more than 14 per cent in morning trading after the athletic attire company forecast annual sales and profit above analysts’ estimates.
Lululemon said it expects fiscal 2023 revenue between US$9.30-billion and US$9.41-billion, above analysts’ average estimate of US$9.14-billion, according to Refinitiv IBES data. The company forecast full-year profit in the range of US$11.50 to US$11.72 per share, compared with analysts’ estimate of US$11.26.
Early Wednesday, Montreal-based retailer Dollarama topped quarterly revenue forecasts when it released its latest results.
The Montreal-based company’s fourth-quarter revenue rose to $1.47-billion, from $1.22-billion a year earlier, beating expectations of $1.39-billion, according to Refinitiv IBES data. The stock was up nearly 0.80 per cent in early trading in Toronto.
Overseas, the pan-European STOXX 600 was up 0.99 per cent by midday. Britain’s FTSE 100 gained 0.90 per cent. Germany’s DAX and France’s CAC 40 were up 0.91 per cent and 1.29 per cent, respectively.
In Asia, Japan’s Nikkei gained 1.33 per cent. Hong Kong’s Hang Seng jumped 2.06 per cent with Alibaba shares boosting tech stocks.
Crude prices were up for a third session, helped by easing worries about the state of global banks and Kurdish supply concerns.
The day range on Brent was US$78.73 to US$79.30 in the early premarket period. The range on West Texas Intermediate was US$73.50 to US$74.
“There’s been a broad improvement in risk appetite at the start of the week thanks to a weekend without drama in the banks,” OANDA senior analyst Craig Erlam said.
“That’s enabled stocks to bounce back and yields to creep higher on stronger economic prospects which, in turn, is lifting crude prices.”
Meanwhile, Reuters reports that crude exports of 450,000 barrels per day from Iraq’s semi-autonomous northern Kurdistan region were halted on Saturday following an arbitration decision that confirmed Baghdad’s consent was needed to ship the oil. On Wednesday, Norwegian oil firm DNO said it had begun shutting down production at its fields in Kurdistan, the news service said.
Later Wednesday morning, traders will get weekly U.S. inventory figures from the U.S. Energy Information Administration. The American Petroleum Institute reported late Tuesday that crude stocks for the week fell by 6.1 million barrels.
In other commodities, gold prices fell as broader risk sentiment improved.
Spot gold was trading 0.6-per-cent lower at US$1,961.80 per ounce by early Wednesday morning, after rising 1 per cent on Tuesday. U.S. gold futures slipped 0.5 per cent to US$1,963.10.
“Risk appetite has improved and yields are rising so naturally, gold is giving back some of the banking panic gains it accumulated over the last few weeks,” Mr. Erlam said.
“Even so, it isn’t trading too far from $2,000, seemingly a major psychological obstacle, and it’s well off its recent lows.”
The Canadian dollar was steady, trading around the mid-73-US-cent mark, as risk sentiment improved and crude prices gained while it’s U.S. counterpart saw a modest advance against a group of world currencies.
The day range on the loonie was 73.43 US cents to 73.60 US cents ahead of the North American open. The Canadian dollar is up about 1 per cent over the last five days and steady over the past month.
“The CAD went on a mini run higher against the USD yesterday and is holding those gains this morning,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“The move up in the CAD is pressuring CAD short positioning that has accumulated quickly in the past few weeks as investors focused on a sidelined BoC and (through early Mar) the risk of more aggressive Fed policy tightening. That never materialized, of course, and ensuing developments have pared back Fed expectations considerably.”
There were no major Canadian economic releases due Wednesday. Bank of Canada Deputy Governor Toni Gravelle is scheduled to speak in Montreal on market liquidity measures undertaken during COVID-19.
On world markets, the U.S. dollar index, which measures the greenback against a basket of currencies, gained 0.15 per cent to 102.64 after falling in the last two sessions. The index is down about 2 per cent for the month so far, according to figures from Reuters.
The euro was down 0.1 per cent on the day at US$1.0834 and Britain’s pound slid slightly to hit US$1.2316, just off the previous day’s near two-month intraday high of US$1.2348.
In bonds, the yield on the U.S. 10-year note was down slightly at 3.543 per cent in the predawn period.
More business news
UBS Group AG has rehired Sergio Ermotti as CEO to steer its massive takeover of neighbour Credit Suisse – a surprise move to take advantage of the Swiss banker’s experience rebuilding the bank after the global financial crisis. The trader turned corporate problem fixer faces the tough challenge of laying off thousands of staff, cutting back Credit Suisse’s investment bank and reassuring the world’s wealthy that UBS remains a safe harbour for their cash. “We felt we had a better horse,” said UBS chairman Colm Kelleher of the decision to replace current CEO Ralph Hamers after less than three years in charge. –Reuters
Macy’s Inc on Wednesday said its Chief Executive Officer Jeff Gennette will retire in February 2024, after serving the company for 40 years. –Reuters
(10 a.m. ET) U.S. Fed Vice Chair for Supervision Michael Barr testifies before the House Financial Services Committee.
(10 a.m. ET) U.S. pending home sales for February.
(12:30 p.m. ET) Bank of Canada Deputy Governor Toni Gravelle speaks in Montreal on “The Market Liquidity Measures We Took During COVID”
With Reuters and The Canadian Press
Walmart and Costco in Canada not making food inflation worse, experts say – CTV News
Experts say the Canadian presence of American retail giants such as Walmart and Costco isn’t likely to blame for rising grocery prices.
That’s despite Canadian grocery chain executives having pushed for MPs to question those retailers as part of their study on food inflation.
University of Toronto economist Ambarish Chandra called ongoing hearings before a parliamentary committee studying the issue, “performative,” saying all retailers seek to maximize profits despite their stated efforts to minimize price hikes.
“It’s easy to call on the foreign companies and make them explain why they’re fleecing hardworking Canadians,” said Chandra.
“It’s not as though American grocers are taking advantage of Canadians and Canadian grocers aren’t. The grocers are going to charge what they can get away with, what the market will bear.”
His remarks come as Canadian grocers and consumersare under pressure as food prices continue to skyrocket despite overall inflation easing in recent months.
Grocery prices were up 10.6 per cent in February compared with a year ago, while overall inflation was 5.2 per cent. The grocery inflation rate was down from an 11.4 per cent year-over-year increase in January.
Walmart Canada president and chief executive Gonzalo Gebara told the parliamentary committee Monday that his company is not trying to profit from food inflation.Instead, he insisted it is striving to maintain a price gap between its products and those sold by its competitors.
Walmart Canada’s gross profit rate for its food business and its total operating profit in dollars declined last year, he added.
Gebara’s testimony followed a highly-anticipated, March 8 committee meeting in which the heads of Metro Inc. and Empire Co., two of Canada’s three biggest grocery chains, questioned why MPs had not called on American retail giants to answer questions for their research into food inflation.
The committee then unanimously agreed to invite the leaders of Walmart and Costco’s Canadian arms to speak.
Pierre Riel, Costco’s senior vice-president and country manager for Canada, is scheduled to appear before the committee on April 17. A Costco spokesperson did not respond to a request for comment on Riel’s upcoming appearance.
Canadian grocers including Loblaw chairman and president Galen Weston told the committee earlier this month that food inflation is not being caused by profit-mongering, insisting their margins on food have remained low.
But Chandra said that framing is merely “window dressing.”
“We’ve seen, frankly, bad behaviour from these grocers over the years, whether it’s price fixing or other sorts of scandalous issues, like co-ordinating on reducing pay for cashiers during the pandemic — all of these things stemmed from the fact that we just don’t have enough competition,” he said.
“We should look into encouraging competition, and one way to do that is to actually have more foreign grocers in the country. So, the presence of Walmart is actually good for Canada in the long run, not bad for it.”
Simon Somogyi, an agribusiness researcher at the University of Guelph, added that Walmart and Costco are larger companies than Canadian grocers, which gives them the ability to source products in greater volumes, ultimately allowing them to sell at lower prices.
“Their inclusion in our retail landscape is important and allows consumers to have a choice of where they want to put their money,” he said.”Typically, their motto is ‘come to us because we sell in bulk, at a typically lower price than our competitors.”‘
He said “any competition that can come into the marketplace is welcomed” in order to help keep costs down.
Factors such as high costs for delivery, packing and labour, along with historically high commodity prices, are still contributing to rising grocery bills, but experts have said they expect food price increases to normalize by the end of 2023.
If the ongoing committee hearings yielded increased transparency surrounding the mechanisms that lead to increased costs for suppliers, Somogyi said it would benefit the public.
“The hearings that we’ve been seeing are really about, from a consumer perspective, why are prices going up? I’d sort of hoped in some ways for far more discussion on how supplier prices are set,” he said.
“The two are linked, but a lot of the theatrics that we’ve seen in this hearing haven’t really got to the bottom of that.”
This report by The Canadian Press was first published March 29, 2023.
Canada eases some rules around foreign homebuyers ban
The federal government announced amendments to the foreign homebuyer ban on Monday that eases some restrictions for non-Canadians, including newcomers to the country.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act was passed by Parliament in June 2022 and came into force on the first day of 2023.
Under that law, non-citizens, non-permanent residents, and foreign commercial enterprises were blocked from purchasing Canadian homes — with some exceptions for international students and temporary residents. Those who violate the ban face a $10,000 fine and may have to sell the offending property.
The amendments will now allow some non-Canadians to purchase residential property in certain circumstances in order to help add to Canada’s housing supply, according to a statement from the ministry of housing.
Effective immediately, work permit holders or those authorized to work in Canada can now purchase a home to live in while working in the country. Work permit holders must have 183 days or more of validity remaining on the permit at the time of the purchase, and cannot purchase more than one residential property, according to the statement.
The ban will also now not apply to vacant land zoned for residential and mixed-use, so non-Canadians can purchase such land with the potential of using it for residential development.
There will also now be an exception to allow non-Canadians, as well as publicly traded entities formed in Canada but controlled by a non-Canadian, to purchase residential property for the purpose of development.
In addition, the government will consider a privately-held corporation or entity to be foreign if a non-Canadian owns up to 10 per cent of its equity, up from three per cent.
“These amendments will allow newcomers to put down roots in Canada through home ownership and businesses to create jobs and build homes by adding to the housing supply in Canadian cities,” Housing Minister Ahmed Hussen said in a statement in CMHC’s release.
“These amendments strike the right balance in ensuring that housing is used to house those living in Canada, rather than a speculative investment by foreign investors.”
Canada has been accepting record numbers of immigrants into the country, and the ban was previously criticized by some experts for not allowing them to purchase homes.
The foreign homebuyers ban was put in place to limit foreign investment in property that potentially could be taking away homes for Canadians, according to Hussen.
However, the policy has been criticized for not being the right approach to tackling housing affordability.
Elton Ash, ReMax executive president for Western Canada, told Global News in January that non-Canadian homeowners don’t make up a significant amount of real estate transactions.
“I can tell you with full confidence, (the ban) will have zero effect on house prices,” he said.
— with files from Global News’ Kathryn Mannie
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